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are subject to modification and technical correction prior to official
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authoritative.

NO. COA04-1097

NORTH CAROLINA COURT OF APPEALS

Filed:16 August
2005

JANET BRANCH,

Employee,

Plaintiff,

v.North
Carolina Industrial Commission

I.C. File Nos. 453005 & 921804

CAROLINA
SHOE COMPANY,

Employer,

N.C. INSURANCE GUARANTY

ASSOCIATION(formerly RELIANCE

INSURANCE COMPANY, Carrier),

Statutory
Insurer,

Defendants.

Appeal by defendants from Opinion and Award entered
6 April 2004 by the North Carolina Industrial Commission.Heard in the Court of Appeals 14 April 2005.

Defendants Carolina Shoe Company and N.C. Insurance Guaranty
Association appeal from an opinion and award of the Industrial Commission,
awarding plaintiff Janet Branch total disability compensation based on a change
of condition under N.C. Gen. Stat. §97-47 (2003).On appeal, defendants argue that the Full Commission was bound by
its decision remanding the case for an evidentiary hearing on specified issues
and that the Commission, therefore, erred when its subsequent opinion and award
went beyond those specified issues.Although we hold that the Full Commission was not limited by its earlier
decision, it was obligated to give the parties notice and an opportunity to be
heard prior to basing its decision on issues that the parties had no reason to
believe would be addressed.We,
therefore, reverse the Commission’s decision and remand for further proceedings
to allow the parties an adequate opportunity to present evidence on the
question whether there was a change of condition under N.C. Gen. Stat. §97-47.

Facts

Sometime before March 1994, while working as a “utility
person” for Carolina Shoe, Branch began to experience pain in her right foot.[Note
1]After she was diagnosed as
having a Morton’s neuroma, defendants accepted that condition as a compensable
occupational disease.Branch ultimately
underwent two surgeries on her right foot.

On 26 September 1994, the parties entered into a
Form 21 agreement for payment of temporary partial disability that was approved
by the Commission on 11 October 1994.Throughout most of these proceedings, Branch continued to work part-time
for Carolina Shoe, primarily in a position in the company’s tag room where her
duties included sorting papers and tags, hand stamping papers, and stapling
papers.

Following her second surgery in 1995, Branch continued to
experience pain in her right foot, and beginning in April 1996, Branch also
began complaining about pain in her upper extremities.Her ongoing pain in her foot was diagnosed
as reflex sympathetic dystrophy (“RSD”).Her doctors variously found no medical explanation for her upper
extremity pain, found her upper extremities to be normal, or concluded that the
upper extremity problems were the result of poor posture and deconditioning
because of Branch’s inactivity and lack of use of her right foot.From March 1995 through September 1997, in
addressing Branch’s conditions, her approved treating physicians each
recommended that Branch increase her activity, including a gradual increase in
her working hours until she was working eight hours a day.Branch did not comply with these
recommendations but rather worked between two to four hours per day, five days
a week.

In addition to seeing her approved physicians, Branch
consulted with Dr. Gary Poehling beginning in December 1996.Dr. Poehling has never been authorized by
the insurer or the Commission as a treating physician.With respect to her right foot, he agreed
with the diagnosis of RSD and recommended that Branch be as active as possible,
but approved a modified work schedule.In May 1997, Dr. Poehling saw Branch for complaints of pain in her upper
extremity.He recommended work
restrictions of light duty, less than five pounds lifting, no repetitive use of
the right extremity, and no vibrating tools.Dr. Poehling next saw Branch on 4 September 1997.He diagnosed complex regional pain syndrome
in both the upper and lower right extremities.He recommended that she continue to work on light duty and that she
increase her work time from four to six hours per day.

In an opinion and award filed 31 December 1997, following a
hearing in February 1997, deputy commissioner W. Bain Jones, Jr. found that
Branch’s condition at that point was “the result of her failure to comply with
the treatment recommendations of all of her physicians, by failing to increase
her activities, including increasing the number of hours she daily works at her
job.”He concluded that “[p]laintiff
has unjustifiably refused to return to work pursuant to her physicians’
instructions; therefore her eligibility for wage loss compensation under the
Act is suspended as of 22 May 1997.”

On 9 January 1998, plaintiff appealed to the Full
Commission.In an opinion and award
filed 17 February 1999, the Commission made the following pertinent findings of
fact:

29.Plaintiff’s
condition is the result of her failure to comply with the treatment
recommendations of her physicians that she increase her level of activity,
including increasing the number of daily hours she works at her job.The tag room position did not aggravate or
contribute to her continuing complaints of pain, and she is physically able to
perform the tasks of the job.The
primary reason for her condition is inactivity and resulting deconditioning.

30.Plaintiff’s upper
extremity complaints are not medically substantiated and are not caused by the
compensable foot injury.The tag room
position did not cause plaintiff’s upper extremity pain.

31.The physicians’
findings of various points of maximum medical improvement in this case demonstrate
how plaintiff’s self-limitations on her physical activity have worsened her
condition and prevented her recovery.These self-limitations were out of proportion to her pain and were
unjustified.Plaintiff did not
demonstrate a motivation to improve.She did not demonstrate a willingness to return to work full time in the
tag room or in any other available light duty positions.Absent her self-imposed limitations, plaintiff
likely would have improved and would have been able to return to work full
time.Given plaintiff’s noncompliance,
it is unlikely that further medical intervention will improve her condition.

32.Plaintiff
reached maximum medical improvement no later than 16 September 1997.She has a permanent impairment rating of 20%
to her left foot.

Based
on its findings, the Commission concluded that Branch had unjustifiably refused
to comply with her physicians’ recommendations that she increase her level of
activity, including her work hours, in order to improve.It, therefore, suspended her eligibility for
wage loss compensation as of 16 September 1997.The Commission also concluded that Branch was not entitled, for
the same reasons, to payment for medical treatment after that date.

The Commission directed that “[i]n order to reinstate
benefits, plaintiff must comply with the following work schedule:Plaintiff must begin working four hours a
day regularly for a period of two weeks, then increase her daily work schedule
by one hour each successive week until she reaches a regular schedule of eight
hours per day.”Neither party appealed
from this opinion and award.

One month later, on 5 April 1999, Branch filed a Form 18
that alleged a “worsening in her pain syndrome from the work related
injury.”The nature and extent of this
injury was reported to be “[c]omplex regional pain syndrome involving the
predominantly right lower extremity as well as right upper extremity secondary
to work related injury to the right lower extremity.”Plaintiff claimed her disability started on 6 November 1997.

On 25 September 2000, deputy commissioner Richard B. Ford
filed an order addressing two motions of plaintiff:(1) a motion to combine plaintiff’s original claim (I.C. No.
453005) with her new claim (I.C. No. 921804) for purposes of hearing, and (2) a
motion to reopen I.C. No. 453005 for change of condition.The deputy found that Branch had not
appealed from the prior opinion and award and had not complied with it, that
the terms and conditions in I.C. No. 453005 were the law in the case, that
there had been no change of condition with respect to plaintiff’s right foot,
and that I.C. No. 921804 sought recovery for an upper extremity injury
occurring on 5 November 1997.He
ordered that the 31 December 1997 opinion and award was still in full force and
effect and that I.C. No. 921804 would be set for hearing.Plaintiff appealed this decision to the Full
Commission on 5 October 2000.

In an opinion and award filed 20 March 2002, the Full
Commission concluded first that “[p]laintiff is entitled to file a motion to
modify the Commission’s Award based on a change of condition under Section
97-47 and is entitled to present evidence relevant to this issue.”After concluding that the findings of fact
and conclusions of law in the 17 February 2000 opinion and award were final and
could not be relitigated, the Commission observed that “this fact does not
preclude plaintiff from asserting and presenting relevant evidence on a change
of condition under Section 97-47.”

The Commission then concluded that this case differed from
the usual N.C. Gen. Stat. §97-47 change of condition claim because of the
Commission’s prior findings that (1) plaintiff has self-imposed limitations and
failed to comply with her physicians’ treatment plan, (2) the benefits had been
suspended, and (3) plaintiff’s upper extremity pain syndrome, as argued in I.C.
No. 453005, is not related to her compensable lower extremity injury.The Commission, therefore, concluded that
evidence that plaintiff’s condition had gotten worse would not “purge the prior
finding that plaintiff failed to accept suitable employment and thereby is not
entitled to benefits under Section 97-32.Therefore, mere evidence that plaintiff’s condition has worsened is not
relevant to the issues before the Commission.”

The Commission then remanded to the deputy commissioner for
a hearing on specified issues:

[T]he issues
raised by plaintiff’s Form 18 in I.C. No. 921804 and the motion for change of
condition in I.C. No. 453005 are:(1)
whether plaintiff has complied with her physician’s treatment plan and
reasonably sought employment sufficient to remove the Section 97-32 suspension
of benefits; (2) whether plaintiff has sustained a compensable injury to her
right upper extremity in I.C. No. 921804 that is different from the condition
for which compensation was previously sought and denied in I.C. No. 435005; and
if so, (3) what benefits, if any, is plaintiff entitled to receive.

On
remand, a hearing took place before deputy commissioner Ronnie E. Rowell, and
the parties took the depositions of Dr. Mark McManus, Dr. Gary Poehling, and
Dr. Hans Hansen.Following the closing
of the record, the deputy commissioner transferred the matter to the Full
Commission.

The Full Commission entered its opinion and award on
6 April 2004.The Commission first
observed that the medical depositions would support findings that plaintiff’s
complex regional pain syndrome migrated from her lower extremity to the upper
extremity, that the tag room position exacerbated the upper extremity pain
syndrome and that, as of December 1997, plaintiff was unable to work in any job
due to the complex regional pain syndrome in her upper and lower
extremities.The Commission then found
(1) that plaintiff had presented no evidence that she had made any effort to
seek employment or to comply with the 17 February 1999 opinion and award, (2)
that plaintiff presented no evidence of a new onset of an occupational disease
or new injury in I.C. No. 921804, and (3) that the issues concerning
plaintiff’s upper extremity condition and its relationship to her compensable
right foot condition and the tag room job “have previously been litigated and
ruled upon by the Full Commission.The
Full Commission decisions on these issues were not appealed and therefore are
final and binding on the parties.”

The Commission then ruled that the only remaining issue was
whether plaintiff had sustained a change of condition.The Commission acknowledged that its 20
March 2002 opinion and award had stated that “mere evidence that plaintiff’s
condition has worsened is not relevant to the issues before the Commission,”
but found that “the recently submitted uncontroverted medical evidence in the
deposition testimony of Drs. Poehling, Hansen and McManus shows that plaintiff
was not capable of work in any employment after December 18, 1997 due to the
pain syndrome in both upper and lower extremities.”The Commission added that “[t]here is no medical evidence in the
record that since December 1997 plaintiff was capable of returning to work in
any employment or that working would improve her condition.”

Based on these findings, the Commission concluded that
plaintiff’s upper extremity condition was not compensable under either I.C. No.
453005 or I.C. No. 921804.The
Commission concluded, however, that as of 18 December 1997, plaintiff was no
longer capable of work in any employment due to the combination of her
compensable complex regional pain syndrome in her lower extremity and her
non-compensable complex regional pain syndrome in her upper extremity. Because no medical evidence was presented to
apportion the extent of disability between the compensable condition and the
non-compensable condition, the Commission concluded that plaintiff was entitled
to a resumption of total disability compensation after 18 December 1997 “and
continuing until further Order of the Commission.”

The Commission also concluded that plaintiff was entitled to
authorized medical treatment related to the compensable right foot condition,
but because Drs. Poehling, McManus, and Hansen were not authorized treating
physicians, plaintiff was not entitled to payment by defendants of the care
provided by those physicians.The
Commission then directed that a Commission nurse be assigned to manage
plaintiff’s treatment, to assist the parties in the designation of an
authorized treating physician, and to schedule a vocational assessment as
recommended by Dr. Hansen.

Defendants filed a timely notice of appeal of the Full
Commission’s opinion and award.Plaintiff has not appealed any aspect of the opinion and award.

Discussion

Defendants argue on appeal that the Commission was precluded
by its 20 March 2002 decision from concluding in its 6 April 2004 opinion and
award that plaintiff had sustained a change of condition.We disagree.

“This Court has held that when the matter is ‘appealed’ to
the full Commission pursuant to G.S. 97-85, it is the duty and responsibility
of the full Commission to decide all of the matters in controversy between the
parties.”Vieregge v. N.C. State
Univ., 105 N.C. App. 633, 638, 414 S.E.2d 771, 774 (1992).In appealing to the Full Commission, a
plaintiff “is entitled to have the full Commission respond to the questions
directly raised by [its] appeal.”Id.
at 639, 414 S.E.2d at 774.

Despite the Commission’s responsibility to consider all the
issues before it, “[t]he doctrine of res judicata precludes relitigation
of final orders of the Full Commission and orders of a deputy commissioner
which have not been appealed to the Full Commission.”Bryant v. Weyerhaeuser Co., 130 N.C. App. 135, 138, 502
S.E.2d 58, 61, disc. review denied, 349 N.C. 228, 515 S.E.2d 700
(1998).In Bryant, similarly to
this case, the plaintiff did not appeal from a deputy commissioner’s initial
opinion and award suspending the plaintiff’s compensation benefits until the
plaintiff cooperated with reasonable vocational rehabilitation efforts.Id. at 136, 502 S.E.2d at 59.Subsequently, a deputy commissioner and, on
appeal, the Full Commission found that the plaintiff was incapable of participating
in a vocational rehabilitation program.Id. at 137, 502 S.E.2d at 60.

This Court, in reviewing the defendant’s contention that the
Commission’s decision was barred by res judicata, held that “[t]heessential elements of res judicata
are:(1) a final judgment on the merits
in a prior suit; (2) an identity of the cause of action in the prior suit and
the present suit; and (3) an identity of parties or their privies in both
suits.”Id. at 138, 502 S.E.2d
at 61.The Court concluded that the
doctrine of res judicata was not implicated in Bryant because
“the Full Commission did not relitigate whether Plaintiff must comply with
‘reasonable’ vocational rehabilitation, but merely determined that Plaintiff
was incapable of complying with the available vocational rehabilitation
program.”Id.

In this case, because the 20 March 2002 opinion and award
did not conclusively determine the issues between the parties, but rather
ordered further proceedings, it was an interlocutory order and not a final
judgment on the merits.“‘[A]n
interlocutory order or decree is provisional or preliminary only.It does not determine the issues joined in
the suit, but merely directs some further proceedings preparatory to the final
decree.’“Poore v. Swan Quarter
Farms, Inc., 57 N.C. App. 97, 101, 290 S.E.2d 799, 802 (1982) (emphasis
omitted) (quoting Johnson v. Roberson, 171 N.C. 194, 196, 88 S.E. 231,
231-32 (1916)).See alsoPlummer
v. Kearney, 108 N.C. App. 310, 312, 423 S.E.2d 526, 528 (1992) (“An order
is not final, and therefore interlocutory, if it fails to determine the entire
controversy between all the parties.”).Since the 20 March 2002 decision was not a final judgment on the merits,
but rather an interlocutory decision, the doctrine of res judicata does
not apply.

The Commission has the ability to modify its interlocutory
decisions prior to rendering a final decision on the merits.As our Supreme Court observed in Russ,
“[a]n interlocutory order or judgment differs from a final judgment in that an
interlocutory order or judgment is subject to change by the court during the
pendency of the action to meet the exigencies of the case.”Russ v. Woodard, 232 N.C. 36, 41, 59
S.E.2d 351, 355 (1950) (internal quotation marks omitted).See also Welch v. Kingsland, 89 N.C. 179,
181 (1883) (“We think authority to vacate or modify previous orders ascertained
to be erroneous or wrong, when discovered during the progress of the cause and
before final judgment, does reside in the court, and on proper occasions should
be exercised to promote the ends of justice.”).The Commission was, therefore, free to revisit its 20 March 2002
decision prior to filing a final opinion and award on the merits.

By order of the
full Commission, the initial hearing was limited to defendant’s motion to
dismiss for lack of jurisdiction.Given
the limited scope of the hearing, it was patently improper for the deputy
commissioner to find and conclude that plaintiff had suffered an injury arising
from his employment with defendant.It
was similarly improper for the full Commission, on appeal from the Opinion and
Award of the deputy commissioner, to find and conclude that plaintiff had a
compensable injury, regardless of its ruling with respect to jurisdiction.To hold otherwise would deny both parties
their rights under the law.We
therefore express no opinion as to the substantive merits of plaintiff’s claim
but limit our opinion to the question of whether the Industrial Commission had
jurisdiction to consider the claim.

Id. at 312, 309
S.E.2d at 275.The Court then proceeded
to conclude that the Industrial Commission had no jurisdiction to consider the
plaintiff’s claim and that the defendant’s motion to dismiss should have been
granted.Id. at 315, 309 S.E.2d
at 277.We read this opinion as holding
in part that the Commission must first decide whether it has jurisdiction prior
to reaching the merits.SeeBryant
v. Hogarth, 127 N.C. App. 79, 83, 488 S.E.2d 269, 271 (“Subject matter
jurisdiction is a prerequisite for the exercise of judicial authority over any
case or controversy.”), disc. review denied, 347 N.C. 396, 494 S.E.2d
406 (1997).

We also believe that the Court’s reference to a denial of
the rights of the parties concerned the lack of notice and opportunity to be
heard.SeeAllen v. K-Mart,
137 N.C. App. 298, 304, 528 S.E.2d 60, 64 (2000) (“The opportunity to be heard .
. . [is] tantamount to due process and basic to our justice system. . . .Therefore, we hold that where the Commission
allows a party to introduce new evidence which becomes the basis for its
opinion and award, it must allow the other party the opportunity to rebut or
discredit that evidence.”).The
requirement of due process does not, however, mean that the Commission may not
revisit its interlocutory decisions.Instead, the Commission must, prior to making its decision, ensure that
the parties have notice that an issue may be reached and an opportunity to
present evidence pertinent to that issue.

In this case, because of the Commission’s interlocutory
opinion and award remanding to the deputy commissioner, defendants had no
notice that the Commission would be addressing a change of condition or
plaintiff’s inability to comply with the mandated work schedule until after the
Commission filed its 6 April 2004 opinion and award.Defendants, therefore, had no opportunity to obtain and present
medical evidence on those issues.The
Commission then relied upon this lack of evidence when it found:“There is no medical evidence in the record
that since December 1997 plaintiff was capable of returning to work in any
employment or that working would improve her condition.”Defendants justifiably contend that they
“have now been penalized” by their adherence to the Commission’s prior
decisions.Accordingly, we reverse the
Commission’s decision and remand for further proceedings to allow the parties
to present evidence on the questions whether plaintiff experienced a change of
condition under N.C. Gen. Stat. §97-47, whether plaintiff is capable of working
in any employment, and whether working would improve plaintiff’s condition.

Since the issue may arise upon remand, we note that
defendants have argued that the Commission erred in making its findings by
relying upon the testimony of unauthorized physicians, but cite no authority in
support of this position.The fact that
a physician is not authorized by the Commission means that the employer and
carrier cannot be required to pay for treatment by that physician.SeeKanipe v. Lane Upholstery,
141 N.C. App. 620, 627, 540 S.E.2d 785, 789-90 (2000) (Commission could deny
claim for medical expenses if physician not approved by Commission).It does not render the physician’s evidence
incompetent.The Commission did not,
therefore, err in relying upon the opinions of Drs. Poehling, Hansen, and
McManus even though they were not authorized treating physicians of plaintiff.

Defendants have also addressed in their brief the question
of the compensability of plaintiff’s upper extremity condition.The Commission ruled in its 6 April 2004
opinion and award that (1) “[t]he findings and conclusions [in the 17 February
1999 opinion and award] that plaintiff’s upper extremity complaints are not
causally related to the compensable foot injury or to the tag room position are
final and may not be relitigated,” and (2) “[p]laintiff did not sustain an
injury by accident or contract a compensable occupational disease involving her
right upper extremity in I.C. No. 921804.”Neither of these determinations has been appealed by plaintiff, and they
are, therefore, the law of the case and may not be revisited on remand.

Reversed and remanded.

Judges TIMMONS-GOODSON and CALABRIA concur.

NOTE

1.These facts are drawn from the
findings of fact of the Full Commission in a 17 February 1999 opinion and award
that neither party appealed.In the
opinion and award that is the subject of this appeal, the Commission concluded
that these findings are binding on the parties.That conclusion has not been challenged on appeal.